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Report: Wellness Programs Generate Up to $3 Savings for Each Dollar Spent

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by Alex Palmer |
September 13, 2012

Employers tracking the results of their employee wellness programs are finding a high level of return on investment (ROI), reporting savings between $1 and $3 for every dollar spent, according to new research published by the International Foundation of Employee Benefit Plans (IFEBP). Incorporating incentives into wellness programs was found to be a key reason for high healthcare ROI.

The report, “A Closer Look: Wellness ROI,” drew on data from the IFEBP’s recently published “Wellness and Value-Based Health Care” survey, which compared companies that have examined the financial impact of their wellness programs and those that have not. Among employers who measure the ROI on their wellness programs, a full 84 percent have managed to cut healthcare costs.

“Employers are beginning to understand the direct connection that wellness initiatives can have on both employee health and healthcare plan cost savings,” says Michael Wilson, IFEBP CEO, in a statement. “While the primary goal is reducing health costs, we’re also seeing other advantages from wellness initiatives, such as higher employee morale, increased productivity and reduced disability.”

While just 19 percent of the employers studied reported having analyzed the ROI of their wellness programs, those that did so reported healthcare cost declines between $1 to $3 for every dollar spent on their wellness efforts.

The study pointed to incentives, including gift cards, prizes, and raffles, and reductions in insurance premiums, as key drivers of healthcare savings. Nearly half (49 percent) of the employers that achieved ROI from wellness programs were found to offer insurance premium reductions, while just 29 percent of those who did not achieve wellness ROI did the same.

“Incentives are quite valuable, and they absolutely need to be in the toolbox of employers, because they do work,” says Hackleman. “It doesn’t take a lot of money to incent behavior in very powerful ways.”

He emphasizes that these programs succeeded when they offered rewards for specific actions, such as undergoing health screenings or health risk assessments, taking part in a smoking cessation program, or using a healthcare coach. But while the study’s authors urged patients when developing and tracking the impact of any wellness program.

“You won’t necessarily see in the first year whether you are getting any advantages out of a new wellness program. In fact, it may cost you in the first few years ” adds Julie Stich, director of research at IFEBP and a co-author of the report, in a statement. “The general rule of thumb is that it will likely take three to five years to see and measure the results.”